Auditor Report of Hindustan Construction Company Ltd.

Mar 31, 2017

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Hindustan Construction Company Limited (''the Company''), which comprise the Balance Sheet as at 31March 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone

Financial Statements

2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (''the Act'') with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (''Ind AS'') specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

7 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on these standalone financial statements.

Basis for Qualified Opinion

8. As stated in Note 33(a) to the standalone financial statements, the Company''s non-current investments as at 31 March 2017 include investments aggregating Rs. 630.83 crore in two of its subsidiaries; and non-current loans, other non-current financial assets and other current financial assets as at that date include dues from such subsidiaries aggregating Rs.512.42 crore, Rs.38.17 crore and Rs.4.77 crore, respectively, being considered good and recoverable by the management considering the factors stated in the aforesaid note including valuation report from an independent valuer. However, these subsidiaries have accumulated losses and their net worth is fully eroded. Further, these subsidiaries are facing liquidity constraints due to which it may not be possible to realize projections made as per business plans. In the absence of sufficient appropriate evidence, we are unable to comment upon the carrying value of these investments and recoverability of the aforesaid dues and the consequential impact, if any, on the accompanying standalone financial statements. Our audit opinion on the standalone financial statements for the year ended 31 March 2016 was also qualified in respect of this matter.

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31March 2017, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

10. We draw attention to:

a) Note 33(b) to the standalone financial statements regarding the Company''s non-current investment in a subsidiary company, non-current loans, other non-current financial assets and other current financial assets due from such subsidiary aggregating Rs.2.24 crore, Rs.1,124.36 crore, Rs.141.14 crore and Rs.2.47 crore, respectively, as at 31 March 2017 The consolidated net-worth of the aforesaid subsidiary has been fully eroded; however, based on certain estimates and other factors, including subsidiary''s future business plans, growth prospects and valuation report from an independent valuer, as described in the said note, management believes that the realizable amount is higher than the carrying value of the investment, non-current loans, other non-current financial assets and other current financial assets due to which these are considered as good and recoverable. Our opinion is not qualified in respect of this matter.

b) Note 34 to the standalone financial statements regarding uncertainties relating to recoverability of unbilled work-in-progress (other current financial assets), non-current trade receivables and current trade receivables aggregating Rs.911.80 crore, Rs.123.39 crore and Rs.90.30 crore, respectively, as at 31 March 2017, raised in the earlier years in respect of projects suspended or substantially closed and where the claims are currently under negotiations / discussions / arbitration. Pending the ultimate outcome of these matters, which is presently unascertainable, no adjustments have been made in the accompanying standalone financial statements. Our opinion is not qualified in respect of this matter.

c) Note 26.1 and 26.3 to the standalone financial statements regarding remuneration of Rs.10.66 crore paid for each of the financial years ended 31 March 2014 and 31 March 2016 to the Chairman and Managing Director (CMD), which is in excess of the limits prescribed under the provisions of the erstwhile Companies Act, 1956/ the Companies Act, 2013, respectively and for which the Company has filed an application for review / an application, respectively with the Central Government; however approval in this regard is pending till date. Our opinion is not qualified in respect of this matter.

Other Matters

11. a) The Company had prepared separate sets of statutory financial statements for the year ended 31 March 2016 and 31 March 2015 in accordance with Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) on which we issued auditor''s reports to the shareholders of the Company dated 28 April 2016 and 30 April 2015, respectively. These financial statements have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have also been audited by us. Our opinion is not qualified in respect of this matter.

b) We did not audit the separate financial statements of six joint operations, included in these standalone financial statements, whose financial statements reflect total assets of Rs.53.93 crore and net assets of Rs.16.14 crore as at 31 March 2017, total revenues of Rs.45.58 crore and net cash inflows amounting to Rs.4.23 crore for the year ended on that date, as considered in these standalone financial statements. The Company had prepared separate set of statutory financial statements of these joint operations for the years ended 31 March 2017, 31 March 2016 and 31 March 2015 in accordance with accounting principles generally accepted in India and which have been audited by other auditors under generally accepted auditing standards applicable in India. These financial statements have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS. Our opinion in so far as it relates to the amounts and disclosures in respect of these joint operation is solely based on report of the other auditors and the conversion adjustments prepared by the management of the Company, which have been audited by us. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. Further to our comments in Annexure I, as required by Section 143(3) of the Act, we report that:

a) we have sought and except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are in agreement with the books of account;

d) except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;

e) the matters described in paragraphs 8, 10(a) and 10(b) under the Basis for Qualified Opinion/ Emphasis of Matters paragraphs, in our opinion, may have an adverse effect on the functioning of the Company;

f) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as at 31 March 2017 from being appointed as a director in terms of Section164(2) of the Act;

g) the qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph;

h) we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as at 31 March 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 4 May 2017 as per Annexure II expressed a qualified opinion;

i) with respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. the Company, as detailed in Notes 6.1, 32 A(i) to (iii)and 34 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position;

ii. except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the Company, as detailed in Note 18.1to the standalone financial statements, has made provision, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;

iv. the Company, as detailed in Note 13.1 to the standalone financial statements, has made requisite disclosures in these standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on the audit procedures performed and taking into consideration the information and explanations given to us, in our opinion, these are in accordance with the books of account maintained by the Company.

Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.

(b) The fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification.

In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head ''Property, plant and equipment'') are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans to six companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of such loans are not, prima facie, prejudicial to the Company''s interest;

(b) the schedule of repayment of the principal and the payment of the interest has not been stipulated and hence we are unable to comment as to whether repayments/receipts of the principal amount and the interest are regular;

(c) in the absence of stipulated schedule of repayment of principal and payment of interest, we are unable to comment as to whether there is any amount which is overdue for more than 90 days and whether reasonable steps have been taken by the Company for recovery of the principal amount and interest.

(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act, to the extent applicable, in respect of loans, investments, guarantees and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''s products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Statement of arrears of statutory dues outstanding for0020more than six months

Name of the statute

Nature of dues

Amount (Rs. in Crore)

Period to which the amount relates

Due

Date

Date of Payment

The

Sales

1.99

December

20

Not paid

Sales

Tax/ Value

2015

January

till date

Tax Act

Added

2016

Tax/

March to

various

Entry Tax

August

due

2016

dates

(b) There are no dues in respect of duty of customs and duty of excise that have not been deposited with the appropriate authorities on account of any dispute. The dues outstanding in respect of income-tax, sales-tax, service-tax and value added tax on account of disputes, are as follows:

Statement of Disputed Dues

Name of the statute

Nature of dues

Amount (Rs. in Crore)

Amount Paid Under Protest (Rs. in Crore)

Period to

which the

amount

relates

Forum where dispute is pending

The Income Tax Act, 1961

Income Tax

24.63

24.63

A.Y 2006-07 to 2010-11

Income Tax

Appellate

Tribunal

The

Sales Tax Act

Sales Tax/ Value Added Tax/ Entry Tax

0.16

0.15

A.Y 2008-09, 2010-11

Supreme Court

4.70

-

A.Y 1997-98 and 2012-13

High Court

45.76

0.49

A.Y 1996-97 to A.Y 2000-01, A.Y 2005-06, A.Y 2006-07 and A.Y 2013-14

Taxation

Tribunal

91.82

3.28

A.Y 2002-03, A.Y 2004-05 to A.Y. 2013 to A.Y 201314

Commissioner level up to Appellate Authority

The

Finance

Act,

1994

Service tax including interest and

penalty, as applicable

2.84

April 2003 to December 2003

High Court

2.97

January 2006 to March 2006

Taxation

Tribunal

313.94

December 2008 to March 2013

Commissioner level up to Appellate Authority

(viii) The are no loans or borrowings payable to government. The Company has defaulted in repayment of following dues to the financial institution, banks and debenture holders during the year, which were paid on or before the Balance Sheet date.

(Rs. in crore)

Debenture

Holders

Days

Principal

Interest

Total

AXIS - Non-

0 to 30 days

-

0.77

0.77

Convertible

31 to 90 days

4.78

3.06

784

Debentures

91 to 180 days

4.78

4.52

9.30

LIC - Non-

0 to 30 days

-

0.83

0.83

Convertible

31 to 90 days

2.50

1.70

4.20

Debentures

91 to 180 days

-

0.03

0.03

181 to 365 days

-

0.04

0.04

(Rs. in crore)

Banks

Days

Principal

Interest

Total

Axis Bank

0 to 30 days

-

1.51

1.51

31 to 90 days

8.36

6.06

14.42

91 to 180 days

8.36

757

15.93

Bank of Baroda

0 to 30 days

-

0.26

0.26

31 to 90 days

1.24

0.06

1.30

91 to 180 days

0.78

0.65

1.43

Bank of Maharashtra

0 to 30 days

-

0.22

0.22

31 to 90 days

2.01

0.39

2.40

91 to 180 days

-

0.77

0.77

Canara Bank

0 to 30 days

-

2.47

2.47

31 to 90 days

9.63

3.15

12.78

91 to 180 days

9.63

732

16.95

Central Bank of India

0 to 30 days

-

0.51

0.51

31 to 90 days

5.62

0.85

6.47

91 to 180 days

4.51

1.31

5.82

Federal Bank

0 to 30 days

-

0.16

0.16

31 to 90 days

0.99

0.24

1.23

91 to 180 days

0.63

0.10

0.73

IDBI Bank

0 to 30 days

-

1.97

1.97

31 to 90 days

10.76

786

18.62

91 to 180 days

10.76

9.83

20.59

Indian

Overseas

Bank

0 to 30 days

-

0.72

0.72

31 to 90 days

3.81

0.32

4.13

91 to 180 days

2.40

1.89

4.29

Oriental Bank of Commerce

31 to 90 days

6.92

0.43

735

Punjab

National Bank

0 to 30 days

-

0.62

0.62

31 to 90 days

2.50

1.44

3.94

91 to 180 days

0.67

0.62

1.29

State Bank of Hyderabad

0 to 30 days

-

0.39

0.39

31 to 90 days

2.61

1.56

4.17

91 to 180 days

1.19

1.95

3.14

State Bank of Mysore

0 to 30 days

-

0.83

0.83

31 to 90 days

5.44

3.41

8.85

91 to 180 days

2.50

4.07

6.57

State Bank of Travancore

0 to 30 days

0.38

0.02

0.40

31 to 90 days

0.80

0.05

0.85

91 to 180 days

-

0.03

0.03

Syndicate

Bank

0 to 30 days

-

1.83

1.83

31 to 90 days

12.87

4.65

1752

91 to 180 days

-

4.05

4.05

Union Bank of India

0 to 30 days

1.25

0.37

1.62

31 to 90 days

1.97

0.19

2.16

91 to 180 days

-

1.00

1.00

(Rs. in crore)

Banks: Contd.

Days

Principal

Interest

Total

United Bank of India

0 to 30 days

-

2.49

2.49

31 to 90 days

750

2.79

10.29

91 to 180 days

750

766

15.16

Export Import Bank of United States

31 to 90 days

0.77

0.77

Standard

Chartered

Bank

31 to 90 days

4.59

4.59

Development Bank of Singapore

31 to 90 days

3.38

0.23

3.61

91 to 180 days

-

0.45

0.45

Financial Institution

Industrial Finance Corporation of India

0 to 30 days

-

1.20

1.20

31 to 90 days

3.75

2.42

6.17

91 to 180 days

3.75

4.40

8.15

Export Import Bank of India

0 to 30 days

-

3.72

3.72

31 to 90 days

19.94

14.89

34.83

91 to 180 days

19.94

18.61

38.55

Life Insurance Corporation of India

31 to 90 days

-

0.03

0.03

91 to 180 days

-

0.02

0.02

181 to 365 days

-

0.03

0.03

National Bank of Agricultural and

Development

0 to 30 days

-

0.57

0.57

31 to 90 days

3.90

1.50

5.40

91 to 180 days

-

0.19

0.19

SREI

Equipment

Finance

Limited

0 to 30 days

-

0.95

0.95

31 to 90 days

5.78

1.19

6.97

91 to 180 days

-

3.10

3.10

The Company has defaulted in repayment of following dues to the financial institutions, banks and debenture holders during the year, which were not paid as at the Balance Sheet date.

(Rs. in crore)

Debenture

Holders

Days

Principal

Interest

Total

LIC - Non

Convertible

Debentures

31 to 90 days

2.50

2.44

4.94

91 to 180 days

2.50

1.63

4.13

181 to 365 days

2.50

2.44

4.94

(Rs. in crore)

Banks

Days

Principal

Interest

Total

Bank of Baroda

31 to 90 days

0.46

0.98

1.44

91 to 180 days

0.00

0.65

0.65

181 to 365 days

2.50

0.00

2.50

Bank of Maharashtra

31 to 90 days

0.45

0.49

0.94

91 to 180 days

0.00

0.32

0.32

Canara Bank

31 to 90 days

5.73

704

12.77

91 to 180 days

5.73

4.69

10.42

Central Bank of India

31 to 90 days

2.60

1.17

3.77

91 to 180 days

0.00

1.22

1.22

Federal Bank

31 to 90 days

0.37

0.39

0.76

91 to 180 days

0.00

0.68

0.68

Indian

Overseas

Bank

31 to 90 days

1.41

2.55

3.96

91 to 180 days

0.00

1.70

1.70

Oriental Bank of Commerce

31 to 90 days

1.67

0.21

1.88

91 to 180 days

0.00

0.39

0.39

Punjab

National Bank

31 to 90 days

0.67

0.42

1.09

Syndicate

Bank

31 to 90 days

2.87

3.62

6.49

91 to 180 days

0.00

2.41

2.41

Union Bank of India

31 to 90 days

0.72

1.30

2.02

91 to 180 days

0.00

0.87

0.87

United Bank of India

31 to 90 days

4.44

716

11.60

91 to 180 days

4.44

4.77

9.21

Export Import Bank of United States

31 to 90 days

3.21

0.25

3.46

91 to 180 days

3.21

0.17

3.38

181 to 365 days

8.75

0.50

9.25

Standard

Chartered

Bank

31 to 90 days

2.29

0.83

3.12

91 to 180 days

2.29

0.56

2.85

181 to 365 days

0.00

1.67

1.67

Development Bank of Singapore

31 to 90 days

1.69

0.68

2.37

91 to 180 days

1.69

0.45

2.14

181 to 365 days

0.00

0.68

0.68

(Rs. in crore)

Financial

Institution

Days

Principal

Interest

Total

Industrial Finance Corporation of India

31 to 90 days

2.25

2.36

4.61

91 to 180 days

2.25

1.57

3.82

Life Insurance Corporation of India

31 to 90 days

0.00

0.34

0.34

91 to 180 days

0.00

0.23

0.23

181 to 365 days

0.00

0.34

0.34

National Bank of Agricultural and

Development

91 to 180 days

0.00

0.81

0.81

SREI

Equipment

Finance

Limited

31 to 90 days

1.70

2.76

4.46

91 to 180 days

1.70

1.84

3.54

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) during the year. In our opinion, the term loans were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and the requisite details have been disclosed in the standalone financial statements, as required by the applicable Ind AS.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures except for allotment of equity shares and optionally convertible debentures during the year to the lenders pursuant to the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) adopted by the Joint Lender''s Forum as stated in notes 15(h)(iii) and 16.1 to the standalone financial statements. In respect of the same, in our opinion, the Company has complied with the requirements of Section 42 of the Act and Rules framed there under. Further, in our opinion, the amounts so raised have been used for the purposes for which the funds were raised.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

per Adi P. Sethna

Partner

Membership No.:108840

Place : Mumbai

Date : 4 May 2017

Mar 31, 2016

1. We have audited the accompanying standalone financial statements of
Hindustan Construction Company Limited ("the Company"), which comprise
the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended and a summary of
the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

2. The Company''s Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ("the Act") with
respect to the preparation of these standalone financial statements,
that give a true and fair view of the financial position, financial
performance and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies(Accounts) Rules, 2014 (as amended). This
responsibility also includes maintenance of adequate accounting records
in accordance with the provisions of the Act; safeguarding the assets
of the Company; preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.

4. We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the
Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the standalone financial
statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our qualified opinion on the
standalone financial statements.

Basis for Qualified Opinion

8. As stated in Note 32 (a) to the standalone financial statements,
the Company''s long term investments as at 31 March 2016 include
investments aggregating Rs. 474.37 crore in its subsidiaries, namely,
HCC Real Estate Limited and Lavasa Corporation Limited; and the long
term loans and advances, other non-current assets and other current
assets as at that date include dues from such subsidiaries aggregating
Rs. 554.17 crore, Rs. 32.51 crore and Rs. 13.35 crore, respectively,
being considered good and recoverable by the management. However, these
subsidiaries have accumulated operational losses and their net worth is
fully/ substantially eroded as at 31 March 2016. Further, such
subsidiaries are facing liquidity constraints due to which they may not
be able to realize projections made as per their business plans. In the
absence of sufficient appropriate evidence, we are unable to comment
upon the carrying value of these investments and recoverability of the
aforesaid dues and the consequential impact, if any, on the
accompanying standalone financial statements.

Qualified Opinion

9. In our opinion and to the best of our information and according to
the explanations given to us, except for the possible effects of the
matter described in the Basis for Qualified Opinion paragraph, the
aforesaid standalone financial statements give the information required
by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India,
of the state of affairs of the Company as at 31 March 2016, and its
profit and its cash flows for the year ended on that date.

Emphasis of Matters

10. We draw attention to:

a) Notes 26.1 and 26.3 to the standalone financial statements regarding
remuneration of Rs. 10.66 crore paid for each of the financial years
ended 31 March 2014 and 31 March 2016 to the Chairman and Managing
Director (CMD), which is in excess of the limits prescribed under the
provisions of the erstwhile Companies Act, 1956/ the Companies Act,
2013, respectively and for which the Company has filed an application
for review / an application, respectively with the Central Government;
however approval in this regard is pending till date. Our opinion is
not qualified in respect of this matter.

b) Note 32 (b) to the standalone financial statements regarding the
Company''s investments in a subsidiary, long term loans and advances,
other non-current assets and other current assets due from such
subsidiary Rs. 0.25 crore, Rs. 984.82 crore, Rs. 127.48 crore and Rs.
18.31 crore, respectively, as at 31 March 2016. The consolidated
net-worth of aforesaid subsidiary have been fully eroded; however,
based on certain estimates and the other factors, including
subsidiary''s future business plans and growth prospects, as described
in the said note, management considers the decline in the value of
investment as temporary in nature and believes that long-term loans and
advances, other non-current assets and other current assets are good
and recoverable. Our opinion is not qualified in respect of this
matter.

c) Note 33 to the standalone financial statements regarding
uncertainties relating to recoverability of uncompleted contracts and
value of work done (inventory) and long-term trade receivables
aggregating Rs. 978 crore and Rs. 206 crore, respectively, recognised
in the earlier years in respect of projects which were suspended or
substantially closed and where the claims are currently under
negotiations/ arbitration/ litigation. Pending the ultimate outcome of
these matters, which is presently unascertainable, no adjustments have
been made in the accompanying standalone financial statements. Our
opinion is not qualified in respect of this matter.

Other Matters

11. We did not audit the financial statements of six unincorporated
integrated joint ventures, included in the standalone financial
statements, whose financial statements reflect Company''s share in net
loss of Rs. 13.66 crore for the year ended 31 March 2016. These
financial statements have been audited by other auditors whose audit
reports have been furnished to us, by the management, and our opinion
on the standalone financial statements of the Company for the year then
ended, to the extent they relate to the financial statements not
audited by us as stated in this paragraph, is based solely on the audit
reports of the other auditors. Our opinion is not qualified in respect
of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor''s Report) Order, 2016 ("the
Order") issued by the Central Government of India in terms of Section
143(11) of the Act, we give in the Annexure 1 a statement on the
matters specified in paragraphs 3 and 4 of the Order.

13. As required by Section 143(3) of the Act, we report that:

a. we have sought and except for the possible effects of the matter
described in the Basis for Qualified opinion paragraph, obtained all
the information and explanations which to the best of our knowledge and
belief were necessary for the purpose of our audit;

b. except for the possible effects of the matter described in the
Basis for Qualified opinion paragraph,in our opinion, proper books of
account as required by law have been kept by the Company so far as it
appears from our examination of those books;

c. the standalone financial statements dealt with by this report are
in agreement with the books of account;

d. except for the possible effects of the matter described in the
Basis for Qualified opinion paragraph, in our opinion, the aforesaid
standalone financial statements comply with the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014 (as amended);

e. the matters described in paragraphs 8, 10(b) and 10(c) under the
Emphasis of Matters/ Basis for Qualified Opinion paragraph, in our
opinion, may have an adverse effect on the functioning of the Company;

f. on the basis of the written representations received from the
directors as on 31 March 2016and taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2016
from being appointed as a director in terms of Section164(2) of the
Act;

g. the qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the Basis for Qualified
Opinion paragraph;

h. we have also audited the internal financial controls over financial
reporting (IFCoFR) of the Company as of 31 March 2016 in conjunction
with our audit of the standalone financial statements of the Company
for the year ended on that date and our report dated 28 April 2016 as
per Annexure 2 expressed a qualified opinion.

i. with respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:

i. as detailed in Notes 31A (i) to (iii),33 and 43 to the standalone
financial statements, the Company has disclosed the impact of pending
litigations on its standalone financial position;

ii. except for the possible effects of the matter described in the
Basis for Qualified Opinion paragraph, the Company has made provisions
as detailed in Note 10 (b) to the standalone financial statements, as
required under the applicable law or accounting standards, for material
foreseeable losses, if any, on long-term contracts including derivative
contracts;

iii. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.

Annexure 1

Based on the audit procedures performed for the purpose of reporting a
true and fair view on the financial statements of the Company and
taking into consideration the information and explanations given to us
and the books of account and other records examined by us in the normal
course of audit, we report that:

(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.

(b) The fixed assets have been physically verified by the management
during the year and no material discrepancies were noticed on such
verification. In our opinion, the frequency of verification of the
fixed assets is reasonable having regard to the size of the Company and
the nature of its assets.

(c) The title deeds of all the immovable properties (which are included
under the head ''fixed assets'') are held in the name of the Company.

(ii) The management has conducted physical verification of inventory at
reasonable intervals during the year and no material discrepancies
between physical inventory and book records were noticed on physical
verification.

(iii) The Company has granted unsecured loan to six companies covered
in the register maintained under Section 189 of the Act; and with
respect to the same:

(a) in our opinion, the terms and conditions of grant of such loans are
not, prima facie, prejudicial to the Company''s interest.

(b) the schedule of repayment of the principal and the payment of the
interest has not been stipulated and hence we are unable to comment as
to whether repayments/receipts of the principal amount and the interest
are regular;

(c) since the schedule of repayment has not been stipulated, the
provisions of clause 3 (iii) (c) of the Order are not applicable to the
Company.

(iv) In our opinion, the Company has complied with the provisions of
sections 185 and 186 of the Act,to the extent applicable,in respect of
loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits within the meaning of
Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits)
Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of
the Order are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under sub-section (1) of Section 148 of the
Act in respect of Company''s products/services and are of the opinion
that, prima facie, the prescribed accounts and records have been made
and maintained. However, we have not made a detailed examination of the
cost records with a view to determine whether they are accurate or
complete.

(vii) (a) Undisputed statutory dues including provident fund,
employees'' state insurance, income-tax, sales-tax, service tax, duty of
customs, duty of excise, value added tax, cess and other material
statutory dues, as applicable, have generally been regularly deposited
with the appropriate authorities, though there have been delays in few
cases. Further, no undisputed amounts payable in respect thereof were
outstanding at the year-end for a period of more than six months from
the date they became payable.

(b) There are no dues in respect of duty of customs and duty of excise
that have not been deposited with the appropriate authorities on
account of any dispute. The dues outstanding in respect of income-tax,
sales-tax, service tax and value added tax on account of any dispute,
are as follows:

Name Nature of Amount Amount Period to Forum where
of the dues (Rs. in Paid which the dispute is
statute Crore) Under amount pending
Protest relates
(Rs. in
Crore)

The Service 289.10 - January Custom,
Finance tax 2004 to Excise and
Act, 1994 including March 2012 Service Tax
interest Appellate
and Tribunal

penalty, as 0.18 - A.Y. 2004 Commissioner
applicable -2007 -Appeal

(viii) There are no loans or borrowings payable to government. The
Company has defaulted in repayment of following dues to the financial
institutions, banks and debenture holders during the year,which were
paid on or before the Balance Sheet date.

(Rs. in crore)

Debenture - Holders_

Days Principal Interest Total
Amount

AXIS Non-Convertible 0 - 30 days - 1.10 1.10

31 - 90 days - 6.60 6.60

91 - 180 days 6.00 2.18 8.18

LIC Non-Convertible 0 - 30 days - 0.92 0.92

31 - 90 days 2.50 6.39 8.89

91 - 180 days 2.50 0.90 3.40

Banks

Axis Bank 0 - 30 days - 3.35 3.35

31 - 90 days 1.50 10.26 11.76

91 - 180 days 11.48 3.82 15.30

Bank of Baroda 0 - 30 days - 0.58 0.58

31 - 90 days 180 1.99 3.79

Bank of Maharashtra 0 - 30 days - 0.29 0.29

31 - 90 days 1.02 1.72 2.74

91 - 180 days 0.78 0.56 1.34

Canara Bank 0 - 30 days - 6.72 6.72

31 - 90 days 12.25 19.96 32.21

91 - 180 days 9.63 3.26 12.89

Central Bank of India 0 - 30 days - 0.22 0.22

31 - 90 days 2.40 1.26 3.66

91 - 180 days 1.85 0.40 2.25

Federal Bank 0 - 30 days - 0.65 0.65

31 - 90 days 0.77 1.30 2.07

91 - 180 days 0.63 - 0.63

IDBI Bank 0 - 30 days - 7.45 7.45

31 - 90 days 14.56 14.73 29.29

(Rs. in crore)

Banks: Contd.

Days Principal Interest Total
Amount

Indian Overseas Bank 0 - 30 days - 0.89 0.89

31 - 90 days 3.15 5.28 8.43

91 - 180 days 2.40 1.72 4.12

Oriental Bank of 0 - 30 days 1.25 - 1.25

Commerce 31 - 90 days - 1.06 1.06

91 - 180 days - 0.42 0.42

Punjab National Bank 0 - 30 days - 1.38 1.38

31 - 90 days 2.99 2.74 5.73

State Bank of 0 - 30 days - 0.88 0.88

Hyderabad 31 - 90 days 2.39 3.04 5.43

State Bank of Mysore 0 - 30 days - 0.93 0.93

31 - 90 days 5.75 6.40 12.15

91 - 180 days - 0.90 0.90

Syndicate Bank 0 - 30 days - 1.86 1.86

31 - 90 days 6.50 11.03 17.53

91 - 180 days 5.00 3.59 8.59

Union Bank of India 0 - 30 days - 0.93 0.93

31 - 90 days 2.88 3.20 6.08

United Bank of India 0 - 30 days - 2.79 2.79

31 - 90 days 9.75 19.21 28.96

91 - 180 days 7.50 2.69 10.19

State Bank of 0 - 30 days - 0.27 0.27

Travancore 31 - 90 days 0.86 0.96 1.82

Toronto Dominion 0 - 30 days - 0.45 0.45

Bank 31 - 90 days - 0.59 0.59

Standard Chartered 31 - 90 days - 1.64 1.64

Bank 91 - 180 days - 0.81 0.81

Development Bank of 0 - 30 days - 0.71 0.71

Singapore 31 - 90 days 3.26 1.34 4.60

Financial Institutions_

SREI Equipment 0 - 30 days - 1.08 1.08

Finance Limited 31 - 90 days 0.87 3.20 4.07

91 - 180 days 5.78 5.31 11.09

National Bank of 0 - 30 days - 0.44 0.44

Agricultural and 31 - 90 days 2.26 2.62 4.88

Development 91 - 180 days 1.98 0.83 2.81

Life Insurance 0 - 30 days - 0.03 0.03

Corporation of India 31 - 90 days 0.75 0.06 0.81

Export Import Bank 0 - 30 days - 4.64 4.64

of India 31 - 90 days 27.86 36.56 64.42

Industrial Finance 0 - 30 days - 1.35 1.35

Corporation of India 31 - 90 days 1.62 1.37 2.99

91 - 180 days 7.50 7.93 15.43

The Company has defaulted in repayment of following dues to the
financial institutions, banks and debenture holders during the year,
which were not paid as at the Balance Sheet date.

(Rs. in crore)

Financial Institutions

Days Principal Interest Total
Amount

SREI Equipment 0 - 30 days - 1.01 1.01

Finance Limited 31 - 90 days 1.98 - 1.98

Export Import Bank 0 - 30 days - 4.8 4.8

of India 31 - 90 days 12.51 4.3 16.81

Industrial Finance
Corporation of India 0 - 30 days - 1.27 1.27

Banks

Days Principal Interest Total
Amount

Development Bank 31 - 90 days - 0.23 0.23

of Singapore 91 - 180 days - - -

Standard Chartered 0 - 30 days - 1.15 1.15

Bank 31 - 90 days 2.29 0.56 2.85

91 - 180 days 2.29 - 2.29

(Rs. in crore)

Banks: Contd.

Days Principal Interest Total
Amount

Toronto Dominion 0 - 30 days 3.28 - 3.28

Bank 31 - 90 days - 0.15 0.15

United Bank of India 0 - 30 days - 2.70 2.70

Union Bank of India 0 - 30 days 0.43 0.43

31 - 90 days 1.25 0.43 1.68

State Bank of 0 - 30 days - 0.27 0.27

Travancore 31 - 90 days - 0.13 0.13

State Bank of 0 - 30 days - 0.04 0.04
Mysore

State Bank of 0 - 30 days - 0.57 0.57
Hyderabad

Punjab National 0 - 30 days - 0.43 0.43

Bank 31 - 90 days 1.26 0.43 1.69

IDBI Bank 0 - 30 days - 2.43 2.43

31 - 90 days 6.75 4.66 11.41

Federal Bank 0 - 30 days - 0.25 0.25

31 - 90 days - 0.20 0.20

Debenture - Holders

LIC Non-Convertible 0 - 30 days - 0.88 0.88

31 - 90 days 2.50 0.88 3.38

(ix) The Company did not raise moneys by way of initial public offer or
further public offer (including debt instruments). In our opinion, the
term loans availed during the year were applied for the purposes for
which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or
employees has been noticed or reported during the period covered by our
audit.

(xi) In our opinion, managerial remuneration for the year ended 31
March 2016 has been paid and provided in accordance with the requisite
approvals mandated by the provisions of section 197 of the Act, read
with Schedule V to the Act, except for remuneration paid/payable Rs.
10.66 crore for which the Company''s application for approval, in excess
of the limit prescribed by Rs. 8.71 crore is pending with the Central
Government. Pending such approval, excess remuneration paid by the
Company is held under trust.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly,
the provisions of clause 3(xii) of the Order are not applicable to the
Company.

(xiii) In our opinion all transactions with the related parties are in
compliance with sections 177 and 188 of Act, where applicable, and the
requisite details have been disclosed in the financial statements,
etc., as required by the applicable accounting standards.

(xiv) During the year, the Company has made a private placement of
equity shares. In respect of the same, in our opinion, the Company has
complied with the requirement of section 42 of the Act and the amounts
raised have been used for the purposes for which the funds were raised.

(xv) The Company has not entered into any non-cash transactions with
directors or persons connected with them.

(xvi) The Company is not required to be registered under section 45-IA
of the Reserve Bank of India Act, 1934.

For Walker Chandiok & Co LLP

(Formerly Walker, Chandiok & Co)

Chartered Accountants

Firm''s Registration No.: 001076N/N500013

per Adi P. Sethna

Partner

Membership No.:108840

Place : Mumbai

Date : 28 April 2016

Mar 31, 2014

We have audited the accompanying financial statements of Hindustan
Construction Company Limited. (''the Company''), which comprise the
Balance Sheet as at March 31, 2014 , the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 (''the Act'') which shall continue to apply in
respect of section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated September 13, 2013 issued by the Ministry of
Corporate Affairs. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entities
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion

1) In our opinion and to the best of our information and according to
the explanations given to us, the financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;

(ii) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

2) We did not audit the financial statements of certain Integrated
Joint Ventures reflecting Company''s share in Profit of Rs. 1.58 crore in
these financial statements. These financial statements have been
audited by other auditors whose reports have been furnished to us by
the Management, and our opinion, in so far as it relates to the amounts
included in respect of the said audited Joint Ventures, is based solely
on the Reports of the other auditors. Our opinion is not qualified in
respect of this matter.

Emphasis of Matter

3) We draw attention to:

(a) Note No. 35 and 36 of the Notes to financial statements regarding
Company''s exposure in the nature of long-term investments and loans
advances of Rs. 866.13 crore and Rs. 843.01 crore in its subsidiaries
namely HCC Real Estate Ltd. and HCC Infrastructure Ltd. On the basis
of the book value of these companies, there is a diminution in the
value of these investments and advances, which in the opinion of the
Management is of temporary in nature.

(b) Note No. 37 of the Notes to financial statements regarding
Company''s claims of Rs. 518.36 crore outstanding for more than 5 years
under ''Uncompleted Contracts and Value of Work Done'', ''Long Term Trade
Receivables'' and ''Short Term Loans and Advances'' amounting to Rs. 445.53
crore, Rs. 34.33 crore and Rs. 38.50 crore respectively. Considering the
contractual tenability, progress of negotiation with clients and based
on its past experience, management is reasonably confident of the
recovery of the same.

(c) Note No. 38 of the Notes to financial statements regarding ''Long
Term Trade Receivables'' and ''Uncompleted Contracts and Value of Work
Done'' as at March 31, 2014 of Rs. 1,056.57 crore and Rs. 243.11 crore
respectively, representing favorable arbitration awards (including
interest thereon) which have subsequently been challenged by the
clients in courts. Of the above, awards amounting to Rs. 105.44 crore
have been set aside by District/High Courts against which the Company
has preferred appeals at High Courts/Supreme Court and is legally
advised that it has a good case on merit. The recoverability of these
amounts is dependent upon the final outcome of the appeals getting
resolved in the favour of the Company.

(d) Note No. 39 of the Notes to financial statements regarding ''Trade
receivables'' and ''Uncompleted Contracts and Value of Work Done (net of
client advances)'' of Rs. 20.96 crore and Rs. 48.19 crore respectively which
have been outstanding for projects where work has been suspended by the
client or has been projects have handed over to clients. Based on the
continuous dialogue with the Clients, management is reasonably
confident of the recovery of these amounts.

(e) Note No. 28.1 of the financial statement regarding managerial
remuneration paid to Chairman and Managing Director which is in excess
by Rs. 10.18 crore per annum in respect of financial year 2012-13 and
2013-14 for which Company has made an application to the Central
Government; approvals in this regard are under consideration / pending
till date.

Report on Other Legal and Regulatory Requirements

4) As required by the Companies (Auditor''s Report) Order, 2003 (as
amended) (''the Order'') issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Act, we enclose in the
annexure a statement on the matters specified in paragraphs 4 and 5 of
the said Order.

5) As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;

b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956 which shall
continue to apply in respect of section 133 of the Companies Act, 2013
in terms of General Circular 15/2013 dated September 13, 2013 issued by
the Ministry of Corporate Affairs.

e) On the basis of the written representations received from the
directors, as on March 31, 2014, and taken on record by the Board of
Directors, none of the directors of the Company is disqualified as on
March 31, 2014 from being appointed as a director, in terms of clause
(g) of sub-section (1) of Section 2 74 of the Companies Act, 1956;

(Referred to in paragraph 1 under the heading ''Report on Other Legal
and Regulatory Requirements'' of our Report of even date on the
financial statements for the year ended on March 31, 2014 of Hindustan
Construction Company Limited.)

(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) A substantial portion of the fixed assets have been physically
verified by the management during the year. In our opinion the
frequency of verification is reasonable having regard to the size of
the Company and the nature of its assets. No material discrepancies
were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial.
According to the information and explanations given to us, we are of
the opinion that the disposal of fixed assets has not affected the
going concern status of the Company.

(ii) (a) The inventories have been physically verified by the
management at reasonable intervals during the year. In our opinion, the
frequency of verification is reasonable.

(b) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.

(c) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between physical stocks and
the book records were not material and have been properly dealt with in
the books of account.

(iii) (a) The company has not granted unsecured loans and

Inter-Corporate Deposits to companies covered in the Register
maintained under Section 301 of the Act. Hence the provisions of clause
(iii) (a), (b), (c), (d) of paragraph 4 are not applicable to the
company.

(b) The company has taken an unsecured loan from two companies covered
in the Register maintained under Section 301 of the Companies Act,
1956. The maximum amount involved in the current year amounted to Rs. 64
crore and the year-end balance of loans taken from such parties are Rs.
48 crore.

(c) Based on the information and explanations given to us, we are of
the opinion that the rate of interest and other terms and conditions of
loans taken from such parties covered in the Register maintained under
Section 301 are not prima facie prejudicial to the interests of the
company.

(d) According to the information and explanations given to us,
repayments of the principal and interest have been regularly made as
stipulated.

(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of its business, for
purchase of inventory and fixed assets and for the Work Done. However
the internal controls over accounting of consumption, wastages,
material reconciliation, need further strengthening.

(v) (a) The company has taken unsecured loans from two companies which
are covered in the Register maintained under Section 301 of the
Companies Act, 1956. The same has been entered in the register. The
maximum amount involved in the current year amounted to Rs. 64 crore and
the balance at the year end is Rs. 48 crore.

(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under Sec 301 of the
Companies Act,1956 have been made at prices which are reasonable having
regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under. Therefore, the provisions of Section 58A, 58AA and any
other relevant provisions of the Companies Act, 1956 and the rules
framed there under with regard to deposits accepted from the public are
not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business. However the
scope needs to be enlarged to cover project related cost-to-complete
workings and certain areas of head office accounting.

(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government of India,
regarding the maintenance of cost records under clause (d) of
subsection (1) of Section 209 of the Act and are of the opinion that
prima facie, the prescribed accounts and records have been maintained.
We have, however not made a detailed examination of the records with a
view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, Provident Fund,
Investor Education and Protection Fund, Employees'' State Insurance,
Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Cess and other material statutory dues applicable to it have been
generally regularly deposited during the year with the appropriate
authorities. According to the information and explanations given to us,
no undisputed amounts payable in respect of above were in arrears, as
at March 31, 2014 for a period of more than six months from the date on
which they became payable.

(b) According to the records of the Company, sales tax, income tax,
customs duty, wealth tax, service tax, excise duty or cess which have
not been deposited on account of dispute are given below:

Nature Year Amount Forum where dispute is
of (Rs.in pending
dues crore)

(x) The Company does not have any accumulated losses at the end of the
financial year. The Company has not incurred cash losses during the
financial year covered by our audit but has incurred cash losses in the
immediately preceding financial year.

(xi) The details of principal and interest not paid on due dates i.e.
the last dates specified in loan documents or debenture trust deed, to
the Financial Institutions and Banks during the year are as follows

Amount of Principal Period of Delays
(fin crore) (in Days)

41.54 0 to 30

Amount of Interest Period of Delays
(fin crore) (in Days)

157.39 1 to 30

50.97 31 to 60

These dues have been paid by the end of the year and there is no
overdue as of 31st March, 2014

(xii) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities

(xiii) In our opinion the Company is not a chit fund or a nidh / mutual
benefit fund / society. Therefore the provisions of clause 4(xiii) of
the Companies (Auditor''s Report) (Amendment) Order, 2004 are not
applicable to the Company

(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.

(xv) In our opinion, the terms and conditions on which the Company has
given guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interest of the Company.

(xvi) In our opinion the term loans have been applied for the purpose
for which they were raised.

(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that funds raised on short-term basis have not been used for long-term
investment.

(xviii) During the year under audit the Company has not made
preferential allotment of equity shares. However the Company has made
preferential allotment of warrants to companies covered in the register
maintained under Section 301 of the Companies Act, 1956. The price at
which the warrants have been issued has been determined as per the
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirement) Regulations, 2009, which in our opinion is not prejudicial
to the interest of the Company.

(xix) According to the information and explanations given to us, no
debentures were issued during the period.

(xx) The Company has not raised any money by way of public issue during
the year.

(xxi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.

For K.S. Aiyar & Co,

Chartered Accountants

ICAI Firm Registration No: 100186W

Raghuvir M. Aiyar
Place: Mumbai Partner

Date: 2nd May, 2014 Membership No.: 38128

Mar 31, 2013

We have audited the accompanying financial statements of Hindustan
Construction Company Limited.(''the Company''), which comprise the
Balance Sheet as at March 31, 2013, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 (''the Act''). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion

1) In our opinion and to the best of our information and according to
the explanations given to us, the financial statements give the
information required by the Company Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;

(ii) in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

2) We did not audit the financial statements of certain Integrated
Joint Ventures reflecting Company''s share in Loss of Rs. 6.54 crore in
these financial statements. These financial statements have been
audited by other auditors whose reports have been furnished to us by
the Management, and our opinion, in so far as it relates to the amounts
included in respect of the said audited Joint Ventures, is based solely
on the Reports of the other auditors.

Emphasis of Matter

3) We draw attention to:

(a) Note No. 14.1 and 14.2 of the Notes to Accounts regarding Company''s
exposure in the nature of long-term investments and loans and advances
of Rs. 821.65 crore and Rs. 736.33 crore in its subsidiaries namely HCC
Real Estate Ltd. and HCC Infrastructure Ltd. On the basis of the book
value of these companies, there is a diminution in the value of these
investments and advances, which in the opinion of the management is of
temporary in nature.

(b) Note No. 16.1 of the Notes to Accounts regarding litigations
amounting to Rs. 35.50 crore, which are more than one year old as on
31.03.2013, where claims favourably awarded in arbitration have been
subsequently rejected by Courts of Law. The recoverability is dependent
upon the final outcome of the appeals getting resolved in favor of the
Company.

(c) Company''s claims of Rs. 189.46 crore, Rs. 21.28 crore and Rs.
418.06 crore being included under "Long Term Trade Receivables" "Short
Term Loans and Advances" and "Uncompleted Contracts and Value of Work
Done" respectively, which have been outstanding for over 5 years. The
Company has assessed the recoverability of these claims based on
favourable arbitration awards, court orders and legal opinion.
Considering the contractual tenability and legal advice from Company''s
counsel in the matter, the management is confident of recovery of the
same.

(d) Note No. 27.1 of the Notes to Accounts regarding application
seeking approval from Central Government for the excess remuneration
paid to managerial personnel.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

4) As required by the Companies (Auditor''s Report) Order, 2003 (as
amended) (''the Order'') issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Act, we enclose in the
annexure a statement on the matters specified in paragraphs 4 and 5 of
the said Order,

5) As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;

b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956.

e) On the basis of the written representations received from the
directors, as on March 31, 2013, and taken on record by the Board of
Directors, none of the directors of the Company is disqualified as on
March 31, 2013 from being appointed as a director, in terms of clause
(g) of sub- section (1) of Section 274 of the Companies Act, 1956;

(Referred to in paragraph 1 under the heading ''Report on Other Legal
and Regulatory Requirements'' of our Report of even date on the
financial statements for the year ended on March 31, 2013 of Hindustan
Construction Company Limited.)

(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.

(b) A substantial portion of the fixed assets have been physically
verified by the management during the year.

In our opinion the frequency of verification is reasonable having
regard to the size of the Company and the nature of its assets. No
material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial.
According to the information and explanations given to us, we are of
the opinion that the disposal of fixed assets has not affected the
going concern status of the Company.

(ii) (a) The inventories have been physically verified by the
management at reasonable intervals during the year. In our opinion, the
frequency of verification is reasonable.

(b) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.

(c) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between physical stocks and
the book records were not material and have been properly dealt with in
the books of account.

(iii) (a) The Company has not granted unsecured loans and Inter-
Corporate Deposits to companies covered in the Register maintained
under Section 301 of the Act. Hence the provisions of clause (iii) (a),
(b), (c), (d) of paragraph 4 are not applicable to the Company,

(b) The Company has taken an unsecured loan from two companies covered
in the Register maintained under Section 301 of the Companies Act,
1956. The maximum amount involved in the current year amounted to Rs.
32 crore and the year-end balance of loans taken from such parties are
Rs. 32 crore.

(c) Based on the information and explanations given to us, we are of
the opinion that the rate of interest and other terms and conditions of
loans taken from such parties covered in the Register maintained under
Section 301 are not prima facie prejudicial to the interests of the
Company.

(d) According to the information and explanations given to us,
repayments of the principal and interest have been regularly made as
stipulated.

(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for
purchase of inventory and fixed assets and for the Work Done. However
the internal controls over accounting of consumption, wastages,
material reconciliation, need further strengthening.

(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the particulars of contracts or arrangements that need
to be entered into the register maintained under section 301 of the
Companies Act, 1956 have so been entered.

(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under Sec 301 of the
Companies Act,1956 have been made at prices which are reasonable having
regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under. Therefore, the provisions of Section 58A, 58AA and any
other relevant provisions of the Companies Act, 1956 and the rules
framed there under with regard to deposits accepted from the public are
not applicable to the Company,

(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business. However the
scope needs to be enlarged to cover project related cost-to-complete
workings and certain areas of head office accounting.

(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government of India,
regarding the maintenance of cost records under clause (d) of
subsection (1) of Section 209 of the Act and are of the opinion that
prima facie, the prescribed accounts and records have been maintained.
We have, however not made a detailed examination of the records with a
view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company, Provident Fund,
Investor Education and Protection Fund, Employees'' State Insurance,
Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Cess and other material statutory dues applicable to it have been
generally regularly deposited during the year with the appropriate
authorities. According to the information and explanations given to us,
no undisputed amounts payable in respect of above were in arrears, as
at March 31, 2013 for a period of more than six months from the date on
which they became payable.

(b) According to the records of the Company, sales tax, income tax,
customs duty, wealth tax, service tax, excise duty or cess which have
not been deposited on account of dispute are given below :

Nature Year Amount Forum where dispute is
of (Rs. in pending
dues crore)

Tax June 04 to 2.97 Central Excise and Service
March 06 Tax Appellate Tribunal

(x) The Company does not have any accumulated losses at the end of the
financial year. The Company has incurred cash loss during the financial
year covered by our audit.

(xi) The details of principal and interest not paid on due dates i.e.
the last dates specified in loan documents or debenture trust deed, to
the Financial Institutions and Banks during the year are as follows:

Amount of Principal Period of Delays
(Rs. in crore) (in Days)

44.68 0 to 90

8.88 91 to 180

11.84 181 to 365

Amount of Interest Period of Delays
(Rs. in crore) (in Days)

132.70 1 to 30

0.79 31 to 60

0.94 61 to 90

These dues have been paid by the end of the year and there is no
overdue as of March 31, 2013.

(xii) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities.

(xiii) In our opinion the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore the provisions of clause
4(xiii) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are
not applicable to the Company,

(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company

(xv) In our opinion, the terms and conditions on which the Company has
given guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interest of the Company,

(xvi) In our opinion the term loans have been applied for the purpose
for which they were raised.

(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that funds raised on short-term basis have not been used for long-term
investment.

(xviii)According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under Section 301 of
the Companies Act, 1956.

(xix) According to the information and explanations given to us, no
debentures were issued during the period.

(xx) The Company has not raised any money by way of public issue during
the year.

(xxi) To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year except for
frauds on the Company for an amount of Rs. 62.19 Lacs by employees of
the Company, out of which Rs. 3.40 Lacs have been recovered. The matter
has been investigated by management and action for recovery of balance
amount of Rs. 58.79 Lacs is being continued. We are informed that
internal controls have been further strengthened to avoid recurrence of
such cases.

For K.S. Aiyar & Co,

Chartered Accountants

Registration No: 100186W

Raghuvir M. Aiyar

Place: Mumbai Partner

Date: May 3, 2013 Membership No.: 38128

Mar 31, 2012

1. We have audited the attached Balance Sheet of Hindustan
Construction Company Limited, as at March 31, 2012 and also the
Statement of Profit and Loss for the year ended on that date annexed
thereto and the cash flow statement for the year ended on that date.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.

3. We did not audit the financial statements of certain Integrated
Joint Ventures reflecting Company's share in Loss of Rs 3.81 crore in
these financial statements. These financial statements have been
audited by other auditors whose reports have been furnished to us, and
our opinion, in so far as it relates to the amounts included in respect
of the said audited Joint Ventures, is based solely on the Reports of
the other auditors.

(a) Note No 4.4 of the Notes to Accounts regarding admission of the
Company's proposal by CDR Empowered Group for Corporate Debt
Restructuring of Company's debt.

(b) Note No. 271 of the Notes to Accounts regarding application seeking
approval from Central Government for the excess remuneration paid to
managerial personnel.

5. As required by the Companies (Auditor's Report) Order, 2003 as
amended by Companies (Auditor's Report) (Amendment) Order, 2004 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.

6. Further to our comments in the Annexure referred to above, we
report that:

(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the Directors
/ Companies, as on March 31, 2012, and taken on record by the Board of
Directors we report that none of the directors are disqualified as on
March 31, 2012 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2012;

(ii) In the case of the Statement of Profit and Loss, of the Loss for
the year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the
year ended on that date.

(Referred to in paragraph 4 of our Report of even date on the Accounts
for the year ended on March 31, 2012 of Hindustan Construction Company
Limited)

(i) The Company is maintaining proper records showing full particulars
including quantitative details and situation of Fixed Assets.

(ii) A substantial portion of the fixed assets have been physically
verified by the management during the year and in our opinion the
frequency of such verification is reasonable having regard to the size
of the Company and the nature of its assets. No material discrepancies
were noticed on such physical verification.

(iii) Fixed assets disposed off during the year were not substantial.
According to the information and explanations given to us, we are of
the opinion that the disposal of fixed assets has not affected the
going concern status of the Company.

(iv) The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.

(v) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.

(vi) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between physical stocks and
the book records were not material and have been properly dealt with in
the books of account.

(vii) The Company has not granted unsecured loans and Inter-Corporate
Deposits to companies covered in the Register maintained under Section
301 of the Act. Hence the provisions of clause (iii)(b),(c),(d) of
paragraph 4 are not applicable to the Company.

(viii) The Company has taken unsecured loans in the form of
inter-corporate deposit from three companies covered in the Register
maintained under Section 301 of the Companies Act, 1956. The maximum
amount involved in the current year amounted to Rs 29.16 crore and the
balance at the year end is NIL.

(ix) Based on the information and explanations given to us, we are of
the opinion that the rate of interest and other terms and conditions of
loans taken from such parties covered in the Register maintained under
Section 301 are not prima facie prejudicial to the interests of the
Company.

(x) According to the information and explanations given to us,
repayments of the principal and interest have been regularly made as
stipulated.

(xi) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for
purchase of inventory and fixed assets and for the Work Done. During
the course of our audit, we have not observed any major weakness in
internal control system.

(xii) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the particulars of contracts or arrangements referred to
in section 301 of the Act have been entered in the register required to
be maintained under that section. The transactions made in pursuance of
such contracts or arrangements have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.

(xiii) The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under. Therefore, the provisions of Section 58A, 58AA and any
other relevant provisions of the Companies Act, 1956 and the rules
framed there under with regard to deposits accepted from the public are
not applicable to the Company.

(xiv) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business. However the
scope needs to be enlarged to cover project related cost-to-complete
workings and certain areas of head office accounting.

(xv) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government of India,
regarding the maintenance of cost records under clause (d) of
subsection (1) of Section 209 of the Act and are of the opinion that
prima facie, the prescribed accounts and records have been maintained.
We have, however not made a detailed examination of the records with a
view to determine whether they are accurate or complete.

(xvi) According to the records of the Company, Provident Fund, Investor
Education and Protection Fund, Employees' State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
other material statutory dues applicable to it have been generally
regularly deposited during the year with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of above were in arrears, as at
March 31, 2012 for a period of more than six months from the date on
which they became payable.

(xvii) According to the records of the Company, sales tax, income tax,
customs duty, wealth tax, service tax, excise duty or cess which have
not been deposited on account of dispute are given below :

Nature Year Amount Forum where
of dues (Rs in dispute is
crore) pending
1996-97 1.27 High Courts
& 1998- 99

(xviii) The Company does not have any accumulated losses at the end of
the financial year. The Company has incurred cash loss during the
financial year covered by our audit. The Company has not incurred cash
loss during the immediately preceding financial year.

(xix) The Company has defaulted in repayment of dues to Financial
Institutions & Banks. Details are as follows:

Amount of Principal Period of Delays
Default (in Days)
(Rs in crore)

306.17 1 to 30

81.70 31 to 60

133.75 61 to 90

173.75 90 to 101

Amount of Principal Period of Delays
Default (in Days)
(Rs in crore)

26.91 1 to 30

20.57 31 to 60

21.17 61 to 90

(xx) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities.

(xxi) In our opinion the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore the provisions of clause 4(xiii) of
the Companies (Auditor's Report) (Amendment) Order, 2004 are not
applicable to the Company.

(xxii) In our opinion the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditor's Report)
(Amendment) Order, 2004 are not applicable to the Company.

(xxiii) In our opinion, the terms and conditions on which the Company
has given guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interest of the Company.

(xxiv) In our opinion, the term loans have been applied for the purpose
for which they were raised.

(xxv) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that Rs 623 crore of short-term funds have been used for long-term
investments (upon excluding the current maturities of Rs 1,056 crore of
long term loans raised, this is not the case).

(xxvi) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under section 301 of
the Companies Act, 1956.

(xxvii) The Company has created a security / charge in-respect of
secured debentures issued and outstanding at the year end.

(xxviii) The Company has not raised any money by way of public issue
during the year.

(xxix) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.

For K.S. Aiyar & Co

Chartered Accountants
FRN: 100186W

Raghuvir M. Aiyar

Partner

Membership No.38128

Place: Mumbai

Date: April 27, 2012

Mar 31, 2011

1. We have audited the attached Balance Sheet of Hindustan
Construction Company Limited, as at 31st March, 2011 and also the
Profit and Loss Account for the year ended on that date annexed thereto
and the cash flow statement for the year ended on that date. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.

3. We did not audit the financial statements of certain Integrated
Joint Ventures reflecting Companys share in Loss of Rs. 0.76 crores in
these financial statements. These financial statements have been
audited by other auditors whose reports have been furnished to us, and
our opinion, in so far as it relates to the amounts included in respect
of the said audited Joint Ventures, is based solely on the Reports of
the other auditors. The financial statements of an integrated joint
ventures reflecting total assets of Rs. 19.61 crores, share in revenue
of Rs. 19.12 crores and share in loss of Rs. 15.30 crores included in
these financial statements are unaudited.

4. Without qualifying our opinion, we draw attention to Note 27 (i)
and (ii) of Schedule Q regarding the value of investments and loans and
advances to certain subsidiaries.

5. As required by the Companies (Auditors Report) Order, 2003 as
amended by Companies (Auditors Report) (Amendment) Order, 2004 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.

6. Further to our comments in the Annexure referred to above, we
report that:

(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors
/ companies, as on 31st March, 2011, and taken on record by the Board
of Directors we report that none of the directors are disqualified as
on 31st March 2011 from being appointed as a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,
1956.

(f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;

(ii) In the case of the Profit and Loss Account, of the profit for the
year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the
year ended on that date.

Annexure to the Auditors Report ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 4 of our Report of even date on the Accounts
for the year ended on 31st March, 2011 of Hindustan Construction
Company Limited)

(i) The Company is maintaining proper records showing full particulars
including quantitative details and situation of Fixed Assets.

(ii) A substantial portion of the fixed assets have been physically
verified by the management during the year and in our opinion the
frequency of such verification is reasonable having regard to the size
of the Company and the nature of its assets. No material discrepancies
were noticed on such physical verification.

(iii) Fixed assets disposed off during the year were not substantial.
According to the information and explanations given to us, we are of
the opinion that the disposal of fixed assets has not affected the
going concern status of the Company.

(iv) The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.

(v) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.

(vi) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between physical stocks and
the book records were not material and have been properly dealt with in
the books of account.

(vii) The Company has not granted unsecured loans and Inter-Corporate
Deposits to companies covered in the Register maintained under Section
301 of the Act. Hence the provisions of clause (iii)(b),(c),(d) of
paragraph 4 are not applicable to the Company.

(viii) The Company has taken unsecured loans in the form of
inter-corporate deposit from three companies covered in the Register
maintained under Section 301 of the Companies Act, 1956. The maximum
amount involved was Rs. 23.51 crores and the balance at the year end
was Rs. 2 crores.

(ix) Based on the information and explanations given to us, we are of
the opinion that the rate of interest and other terms and conditions of
loans taken from such parties covered in the Register maintained under
Section 301 are not prima facie prejudicial to the interests of the
Company.

(x) According to the information and explanations given to us,
repayments of the principal and interest have been regularly made as
stipulated.

(xi) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for
purchase of inventory and fixed assets and for the Work Done. During
the course of our audit, we have not observed any major weakness in
internal control system.

(xii) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the particulars of contracts or arrangements referred to
in section 301 of the Act have been entered in the register required to
be maintained under that section. The transactions made in pursuance of
such contracts or arrangements have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.

(xiii) The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under. Therefore, the provisions of Section 58A, 58AA and any
other relevant provisions of the Companies Act, 1956 and the rules
framed thereunder with regard to deposits accepted from the public are
not applicable to the Company.

(xiv) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.

(xv) The Central Government has not prescribed the maintenance of cost
records under section 209(1) (d) of the Companies Act, 1956.

(xvi) According to the records of the Company, Provident Fund, Investor
Education and Protection Fund, Employees State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
other material statutory dues applicable to it have been generally
regularly deposited during the year with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of above were in arrears, as at
March 31, 2011 for a period of more than six months from the date on
which they became payable.

(xvii) According to the records of the Company, sales tax, income tax,
customs duty, wealth tax, service tax, excise duty or cess which have
not been deposited on account of dispute are given below :

Nature of Year Amount Forum where dispute is
dues (Rs. in pending
Crs)

(xviii) The Company does not have any accumulated losses at the end of
the financial year and has not incurred cash losses during the
financial year covered by our audit and the immediately preceding
financial year.

(xix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.

(xx) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities.

(xxi) In our opinion the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore the provisions of clause 4(xiii) of
the Companies (Auditors Report) (Amendment) Order, 2004 are not
applicable to the Company.

(xxii) In our opinion the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditors Report)
(Amendment) Order, 2004 are not applicable to the Company.

(xxiii) In our opinion, the terms and conditions on which the Company
has given guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interest of the Company.

(xxiv) In our opinion, the term loans have been applied for the purpose
for which they were raised.

(xxv) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.

(xxvi) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under section 301 of
the Companies Act, 1956.

(xxvii) The Company has created a security / charge in- respect of
secured debentures issued and outstanding at the year end.

(xxviii)The Company has not raised any money by way of public issue
during the year. The monies raised on account of Bonds / GDS issue in
the previous year have been utilised for the purpose for which it was
raised.

(xxix) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.

1. We have audited the attached Balance Sheet of Hindustan
Construction Company Limited, as at 31st March, 2010 and also the
Profit and Loss Account for the year ended on that date annexed thereto
and the Cash Flow statement for the year ended on that date. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.

3. We did not audit the financial statements of certain Integrated
Joint Ventures reflecting Companys share in Loss(Net) of Rs.2.88 Crore
in these financial statements. These financial statements have been
audited by other auditors whose report(s) have been furnished to us,
and our opinion, in so far as it relates to the amounts included in
respect of the said audited Joint Ventures, is based solely on the
Report of the other auditors.

4. As required by the Companies (Auditors Report) Order, 2003 as
amended by Companies (Auditors Report) (Amendment) Order, 2004 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.

5. Further to our comments in the Annexure referred to above, we
report that:

(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;

(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956 to the extent applicable;

(e) On the basis of written representations received from the directors
/ companies, as on 31st March, 2010, and taken on record by the Board
of Directors we report that none of the directors are disqualified as
on 31st March, 2010 from being appointed as a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,
1956.

(f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010;

(ii) In the case of the Profit and Loss Account, of the profit for the
year ended on that date; and

(iii) In the case of Cash Flow Statement, of the cash flows for the
year ended on that date.

Annexure to the Auditors Report (Referred to in paragraph 4 of our
Report of even date on the Accounts for the year ended on 31st March,
2010 of Hindustan Construction Company Limited)

(i) The Company is maintaining proper records showing full particulars
including quantitative details and situation of Fixed Assets.

(ii) A substantial portion of the fixed assets have been physically
verified by the management during the year and in our opinion the
frequency of such verification is reasonable having regard to the size
of the Company and the nature of its assets. No material discrepancies
were noticed on such physical verification.

(iii) Fixed assets disposed off during the year were not substantial.
According to the information and explanations given to us, we are of
the opinion that the disposal of fixed assets has not affected the
going concern status of the Company.

(iv) The inventories have been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.

(v) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.

(vi) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory.
The discrepancies noticed on verification between physical stocks and
the book records were not material and have been properly dealt with in
the books of account.

(vii) The company has not granted unsecured loans and Inter-Corporate
Deposits to companies covered in the Register maintained under Section
301 of the Act. Hence provisions of clause (iii)(b),(c),(d) of
paragraph 4 are not applicable to the Company.

(viii) The company has taken unsecured loans in the form of
inter-corporate deposits from three companies covered in the Register
maintained under Section 301 of the Companies Act, 1956. The maximum
amount involved was Rs16.48 crores and the balance at the year end was
Rs.15.17 crores

(ix) Based on the information and explanations given to us, we are of
the opinion that the rate of interest and other terms and conditions of
loans taken from such parties covered in the Register maintained under
Section 301 are not prima facie prejudicial to the interests of the
company.

(x) According to the information and explanations given to us,
repayments of the principal and interest have been regularly made as
stipulated.

(xi) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for
purchase of inventory and fixed assets and for the Work Done. During
the course of our audit, we have not observed any major weakness in
internal control system.

(xii) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the particulars of contracts or arrangements referred to
in section 301 of the Act have been entered in the register required to
be maintained under that section. The transactions made in pursuance of
such contracts or arrangements have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.

(xiii) The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under. Therefore, the provisions of Section 58A, 58AA and any
other relevant provisions of the Companies Act, 1956 and the rules
framed thereunder with regard to deposits accepted from the public are
not applicable to the Company.

(xiv) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.

(xv) The Central Government has not prescribed the maintenance of cost
records under section 209(1 )(d) of the Companies Act, 1956.

(xvi) According to the records of the Company, Provident Fund, Investor
Education and Protection Fund, Employees State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
other material statutory dues applicable to it have been generally
regularly deposited during the year with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of above were in arrears, as at
March 31, 2010 for a period of more than six months from the date on
which they became payable.

(xvii) According to the records of the Company, sales tax, income tax,
customs duty, wealth tax, service tax, excise duty or cess which have
not been deposited on account of dispute are given below :

Name of Nature of dues Year Amount Forum where
the Statute Rs. crores dispute is
pending

(xviii) The Company does not have any accumulated losses at the end of
the financial year and has not incurred cash losses during the
financial year covered by our audit and the immediately preceding
financial year.

(xix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.

(xx) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities.

(xxi) In our opinion the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore the provisions of clause 4(xiii) of
the Companies (Auditors Report) (Amendment) Order, 2004 are not
applicable to the Company.

(xxii) In our opinion the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditors Report)
(Amendment) Order, 2004 are not applicable to the Company.

(xxiii) In our opinion, the terms and conditions on which the Company
has given guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interest of the Company.

(xxiv) In our opinion, the term loans have been applied for the purpose
for which they were raised

(xxv) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.

(xxvi) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under section 301 of
the Companies Act, 1956.

(xxvii) The Company has created a security / charge in- respect of
secured debentures issued and outstanding at the year end.

(xxviii)The Company has not raised any money by way of public issue
during the year. The monies raised on account of Bonds / GDS issue in
the earlier year have been utilised for the purpose for which it was
raised as disclosed in Note III (20) of Notes forming part of the
Accounts.

(xxix) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.